Planning for retirement usually begins when we get our first job. Our employer often contributes and we set aside money from our paychecks for this purpose.
A peaceful retirement is the ultimate goal of our working years. However, without realizing it, we can end up facing a retirement full of difficulties, insufficient funds and worries. There are many retirement mistakes that people often make.
Here are some that should be avoided.
retire too soon
We often incorrectly assume that our current lifestyle can be maintained at its current level and dollar amount. Looking at the money we have saved, which seems to be enough to support our current lifestyle, we can have a false confidence that the future will look exactly the same as it does now. As we have seen recently, inflation can change the economy with the cost of gasoline rising and the prices of food and necessities rising.
If we retire too early, we may not have saved enough to get us through these situations in the future. There are no guarantees that our current expenses will be the same as our future expenses.
Furthermore, we falsely assume the duration of our particular life. For many of us, we have a supposed age to which we will live, usually between 75 and 80 years old. However, as some very famous people have seen (former President Jimmy Carter, still living at 98, actor Kirk Douglas, who lived to 104, actress Betty White, who lived to 99), it is possible May we live much longer than we think. Having enough retirement savings is essential to being able to enjoy retirement no matter how long we live.
retire too late
Even if you love your job, there will be a time when you want to kick back and relax. It’s important to make sure that your reason for working is love of work and not fear of retirement.
Time spent with family, grandchildren, or even working with your favorite charity can enrich your life and make the world a little brighter. It is important to know when it is time to leave our working lives behind so that we can enjoy our free time while we are physically able.
Not planning for diminished health.
You may have always been the picture of health, never missing a day at work, and always eating your greens. However, nature and time have a funny way of catching up. Your health could worsen, and medical bills can put a dent in your retirement savings.
It is always better to overestimate your future needs than to discover that you have significantly and detrimentally underestimated them.
Use of retirement funds as a source of loanable funds
Hard times hit us all, especially now, and it’s tempting to dip into your retirement account to cover these tough times. Once the money leaves your account, those dollars no longer earn interest or generate income. You are sacrificing the growth potential of your money.
Also, paying off the loan may be more difficult than you think. It’s best to borrow from your retirement account only during that time when you have no other choice.
The best advice anyone can give you to avoid retirement mistakes is to visit a financial planner. He or she has experience managing the ups and downs of the market and determining the best way to handle the ups and downs of retirement. Using the experience and training of your financial planner is the best method for a peaceful retirement that lasts as long as you do.
Mary Fox Luquette, MBA, CLU, ChFC is a finance instructor at the BI Moody III College of Business at the University of Louisiana at Lafayette.